Online Public Relations Thoughts

Daily entries on Public Relations and communications ideas and trends

Friday, May 07, 2010

"Rational" Markets

If you are of a certain age and went to business school, you learned about the efficient market hypothesis -- what is known in the market about a stock is reflected in its price. It makes some sense until events like yesterday when suddenly nothing did. It is established now that markets are not totally efficient or rational because humans aren't either. This is something any PR practitioner could tell a trader or theorist. We deal with the irrational regularly. Yet, we should not be mastered by it or crassly employ it in our work through false argument. PR at its best stands by facts and uses them to make its points. Those who play to the crowd get swallowed by the crowd sooner or later. It is better to avoid emotion and to act in the best interests of all.